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Page 4 of 4
Finagling Subscriber Numbers and Account Identifiers
As you now know, bureaus use subscriber numbers to distinguish between furnishers, preventing duplication and reinsertion. Collection agencies know this and will often submit accounts to the bureaus using a new subscriber number for accounts that are outside the seven year limit for credit reporting. This is especially true for sinister agencies that buy old junk debt for pennies. Since collection agencies understand the credit reporting agency’s use of queries and filters within their repository, they’ll use new or modified account identifiers to get the item to show up on the report when it otherwise wouldn’t.
Through this and other illegal methods, the accounts are listed as new on someone’s credit file, and then collection attempts resume. Many debtors become frustrated and pay the debts to save their credit, simply because they don’t understand that they cannot only get money damages when this happens, but also they can have the collection agencies shut down by notifying the FTC and their state’s attorney general.16
It’s important that consumers dispute any bogus entries with the bureaus, since any affirmation creates huge liability on the part of the furnisher as additional causes of action under the FCRA become available. It can open up the bureau to civil liability as well, so dispute such entries in accordance with Chapter 11.
Violations of Bank Withdrawals
There are two types of bank withdrawals that can be performed by a debt collector. One is a preauthorized draft (demand draft), governed by the Uniform Commercial Code (UCC), and the other is an electronic fund transfer, governed by the Electronic Funds Transfer Act (EFTA). A preauthorized draft is simply a check that a collector prepares and endorses in the account holder’s name. This is legal as long as the debtor authorizes it; if not, it is considered fraud, and the collector is liable under the FDCPA and state UDAP or state debt collection laws. And even if the debtor permits a series of preauthorized drafts, the collector must notify the debtor at least three days (and no more than 10 days) before submitting each draft.17
The UCC permits the account holder debtor to dispute the bank check as long as the bank is notified “promptly.” If the account holder doesn’t dispute the initial check, then subsequent checks will be honored, and no remedy is available under the UCC.
In some cases a debtor will authorize a collector to withdraw money directly from a bank account. However, collectors cannot sign a debtor’s name for a series of electronic funds transfers (EFTs), as they can with a preauthorized draft. If a collector taps an account without permission, the account holder has 60 days from the statement date (date of a billing statement that includes the transaction) to dispute the transaction and avoid liability for the withdrawal.
If there’s no access device (e.g., automated teller machine or debit card) used in the withdrawal, an institution that fails to complete its investigation of a consumer dispute within 10 days and recredit the account can take 45 days to complete its investigation. This increases to 90 days if an access device was involved.18 Consumers can also stop payment on EFTs by notifying the financial institution within three business days prior to the scheduled transfer. Banks are liable under the EFTA for failing to perform their duties under the Act.
Regardless of what type of unauthorized withdrawal takes place, a debt collector should also be liable under state UDAPs as well as the FDCPA.
Most banking institutions are also members of the Automated Clearing House (ACH) network and therefore subject to rules that govern electronic transactions, called the National Automated Clearing House Association (NACHA) rules. For more information on this, see the NCLC Consumer Banking and Payments Law (2d ed. 2002 and Supp.).
Telephone Company Violations
For violations of certain provisions by interstate phone companies of the Federal Communications Act (FCA) and Federal Communication Commission (FCC) tariffs (rules and regulations), a consumer can seek a private lawsuit for negligence and breach of telephone contract. This includes a phone company’s failure to properly address a complaint made to a telephone company by a consumer against a debt collector. Complaints made to the FCC can be made using its Web site: www.fcc.gov.
In-state breaches are more complicated, depending on state law. Contact the FCC or state Public Utilities Commission (PUC) to find out the enforcer in your state. 
16. Numerous breaches of law can exist, including multiple violations of the FCRA and the FDCPA.
17. 15 U.S.C. § 1692f(2).
18. Reg. E, §§ 205.6(b), 205.11(c)(2), 206.11(c)(3)(ii)(B).
The remainder of Chapter 7 covers:
- The life of a debt
- Communicating with collectors
- Mastering the Art of Negotiation
- Recording phone conversations (and summary of State Taping Laws)
- Dealing with third party debt owners
- Taking the Collection Agency out of play (using Validation and Cease Communication)
- Collection lawyers
- Defenses to debts
- When collectors break the rules
- Using restrictively endorsed checks
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